Who Can Benefit from Filing Chapter 13?
You work hard and try to pay your bills on time, but the weight of your debt is too overwhelming. You need help, time, or both to arrange your finances. However, your creditors continue to press you for payments and some may even threaten to garnish your wages or take other legal action against you. Under circumstances like these, it may be a good time to consider filing Chapter 13 bankruptcy with qualified attorneys.
Chapter 13 Overview
Chapter 13 enables you to arrange a repayment plan through the court and to keep your real and personal property while protecting you from creditor collection activities. Another benefit to filing Chapter 13 bankruptcy is that it doesn't take as long to repair your credit because it doesn't show up on your credit report for as long as a Chapter 7. Also, unlike Chapter 7 bankruptcy, Chapter 13 trustees do not liquidate your property to pay off your creditors.
How do you qualify for Chapter 13?
In order to file Chapter 13, you must have regular monthly income and have a sufficient amount of money left over after ordinary expenses to pay off your debts. To qualify, the total amount of your unsecured debt must be under $360,475 and your secured debts under $1,081,400.
How do you structure the repayment plan?
Under Chapter 13 you are allowed to structure your debt repayments over a period of three to five years. The amount you pay under your plan is determined by several factors, including you the amount you can afford to pay after covering your necessary living expenses, including your mortgage payment, car payment, insurance, food, and utilities. You may negotiate with some creditors to pay off less than the full amount that you owe. However, the Bankruptcy Court must review and approve your plan.
How are payments made once the plan is in place?
You make payments under the approved plan to the Chapter 13 trustee assigned to your case. The trustee collects the money then disburses it to your creditors according to the plan. Once you finish making payments under your plan and attend the mandatory money management classes, you can receive a discharge of your debts, meaning, you are released from liability for all debts deemed dischargeable under the law.
A Chapter 13 bankruptcy in Illinois provides consumers with the ability to make payments an opportunity to repay their debts over a specified period of time at a more affordable, reduced monthly payment amount.
If you are having trouble keeping up with payments on your debts and need to reorganize, Chapter 13 may be your answer to financial freedom. You should consult with an experienced bankruptcy attorney from DebtStoppers, Bankruptcy Law Firm to determine if Chapter 13 is the right solution for you.